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Wednesday, May 30, 2012

Bloomberg produced a list of the world's highest and cheapest gas prices by country two weeks ago. The paper did not give a breakdown of the general components of oil pricing, where I believe oil taxes by governments comprise more than half of the oil retail prices in those countries, especially those in the top 10.

Norway is unusual in that it's the only major oil producer to have expensive gas. That's because, instead of subsidizing fuel at the pump, the country uses its oil profits for services such as offering free college education and saving for infrastructure improvements.

Norwegians pay the most of any country to fill up their tanks. They absorb these high prices with relative ease. The average daily income is $270. The share of a day's wages needed to buy a gallon of gas is 3.6 percent.

Denmark's high gas prices haven't drastically reduced the country's consumption. Danes still rank among the top quarter of the world's gas gluttons.

They can afford the higher price, with a comfortable pain-at-the-pump ranking of 42 out of 55. The average daily income is $178. The share of a day's wages needed to buy a gallon of gas is 5.3 percent.

Italy raised gas taxes 24 percent over the past year, triggering some of the highest prices in the world. It has been a shock to the home country of Ferrari and Lamborghini, where car ownership is one of the highest in the world. Auto sales fell more than 20 percent in the first quarter compared with a year earlier.

The austerity measures introduced by Prime Minister Mario Monti's government have pushed Italian gas prices up more than the EU average, with a 9.4 percent increase in 2012 alone. The average daily income in Italy is $103. The share of a day's wages needed to buy a gallon of gas is 9.1 percent.

The Netherlands has the most bicycles per capita in the world. Rows upon rows of them stand at train stations, museums and national parks. A vast infrastructure of bike paths and lanes, tunnels and traffic signals makes cycling easy to adopt.

The bike-loving Dutch feel more pain at the pump than their Scandinavian neighbors when they do drive. The average daily income in the Netherlands is $144. The share of a day's wages needed to buy a gallon of gas is 6.5 percent.

The financial crisis in Greece has only exacerbated the high price of gas and its impact on consumers' wallets. Greece's gas prices are higher than the EU average, rising 11 percent this year.
The average Greek earns $75 a day. The share of a day's wages needed to buy a gallon of gas is 12 percent.

Hong Kong is a part of China but has its own constitution, its own political structure and its own price of gas. Hong Kong residents pay 72 percent more for a gallon of gas than their neighbors in China, where the government caps the price at the pump.

Still, with their higher urban incomes, drivers in Hong Kong feel less pain at the pump than Chinese drivers do. The average daily income in Hong Kong is $101, and the share of a day's wages needed to buy a gallon of gas is 8.8 percent.

The average retail price for gas among the 27 EU member nations surged to a new peak last month, with France, Germany, the U.K., Greece, Italy and Spain all setting records, according to European Commission data.

France has the 11th most expensive gas, despite generous government subsidies -- more than $3 billion in 2010. The cost at the pump has climbed 7.5 percent this year, reducing demand.

The average daily income in France is $124. The share of a day's wages needed to buy a gallon of gas is 7 percent.

A German driver filling the 14.5-gallon tank of Europe's most popular car, Volkswagen's Golf hatchback, pays $124.12, compared with $60.76 for the same fill-up in the U.S. The cost of gasoline at the pump in Europe -- more than double U.S. levels -- hit a fresh high every week from January 13 through April.

The average daily income in Germany is $125. The share of a day's wages needed to buy a gallon of gas is 6.9 percent.

Switzerland ranks among the world's top 10 percent in gasoline consumption, consuming more than an average share for a population of 8 million people. The average daily income is $215. The share of a day's wages needed to buy a gallon of gas is 3.7 percent.

Japan's long-held national gasoline tax helped the country's carmakers take an early lead in developing fuel-efficient vehicles.

The aftermath of the earthquake and tsunami last year contributed to higher gas prices. Still, the average daily income is $131, and the share of a day's wages needed to buy a gallon of gas is 5.8 percent.

Severe austerity measures in Spain are plunging many of the country's highways into darkness as ministries and mayors struggle to afford basic services. More than half the country's illuminated highways have had the lights switched partly or fully off, according to a recent report.

Spain paid about $2.62 billion to subsidize oil in 2010. The average daily income is $93. The share of a day's wages needed to buy a gallon of gas is 8.1 percent.
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Meanwhile, here's a rather weird note I wrote last December 20, 2010.

Oil Subsidy Cut: Is Iran Turning towards Free Market?

Recent international news say that gas prices in Iran have rose from $0.38 a gallon to to $1.44 after the Iranian government drastically cut oil subsidy. That's a 3.78 x increase or almost quadrupling of oil prices. And that's only for the monthly ration level of 16 gallons per week per car. Beyond that level, the price further rises to $2.64 a gallon. These moves will drastically cut the $114 billion a year annual oil subsidies by the government. See the report, Gas Prices Soar in Iran as Subsidy Is Reduced.

Not only oil subsidy, but also subsidies for water, electricity, and bread will be cut piecemeal. Are these signs that the Iranian government is turning free market and moving away from a big nanny state?

Nope. The Iranian government is doing it because of heavy strains caused by global economic sanctions. So Iran cannot export as much oil as it wants to. Which shrinks potential global oil supply.

Statism often attracts statist counter-measures from other countries. So Iran government's nuclear ambition -- what for, erase Israel and other "infidels" from the face of the Earth? -- is attracting counter-measures from other governments.

I wonder if without the militant posturing by the big Iranian government, if the ordinary Iranians would share its view that Israel should be oblitated from the face of the Earth. Most likely not.